Posted
by
timothy
on Monday July 25, 2011 @07:01PM
from the you-wanna-play-in-our-hothouse dept.

CWmike writes "Amazon bowed on Monday to Apple's newest App Store rules, and removed a link in its iPhone and iPad Kindle apps that took customers directly to its online store. The move was required to comply with new rules designed to block developers from evading the 30% cut that Apple takes from in-app purchases. In February, Apple CEO Steve Jobs laid down the law. 'Our philosophy is simple — when Apple brings a new subscriber to the app, Apple earns a 30% share,' said Jobs in a statement released Feb. 15. 'When the publisher brings an existing or new subscriber to the app, the publisher keeps 100% and Apple earns nothing.' Rhapsody updated its iPhone app last week to, among other things, remove the in-app subscribing link. Also on Monday, Google complied with Apple's new rules when it re-released Google Books — which had been yanked from the App Store — minus an in-app purchasing button."

Customers bowed on Monday to Apple's newest App Store rules, and removed iPhone and iPad from their shopping lists. The move was required to comply with new rules designed to block Apple's competitors from making iDevices worth having.

Were your apps used to sell products linked through the app? Otherwise, the percentage is taken on a product with different economics from your app, and hence your experience does not apply.

Even if you did sell products through your apps, they don't necessarily have the same margins as other products. Products with a margin less than 30% would not sell profitably through an Apple app, regardless of your personal experience.

Your products may do fine. Others may not. Mileage may vary; not everyone gets the sa

1) Has been on Slashdot a long time.
and
2) Has a modest level of reading comprehension.
and therefore:
3) Knows a self-important twat when he sees one.

Why can't you simply not be snarky and give us the information of what other third-party services that do hosting, fulfillment and billing you have used, and what their costs/rates and terms were, and we can judge for ourselves whether it is not only perfectly reasonable but a damn good deal? If it's that simple, how is it that this deba

No, it's not. Those with fully functioning brains will change and purchase products from other companies - those who are dumb enough to put up with Apple's shit deserve every extra penny that they lose (this applies to all industries). I bought an iPhone 3GS when they came out because at the time it was the best smartphone - a year later I canceled my AT&T contract, sold the iPhone on ebay, and bought an Evo 4G on Sprint (now upgraded to an Evo 3D) and I'm continually happier and happier that I switch

That would simply give Apple's iBooks a 30% advantage. This is just Apple fucking with people they see as competitors, and abusing their lock on the iProduct userbase to do so.

How, exactly, is this abuse? What stores are you aware of that don't put some sort of mark up on the products they sell?

If you want to use the In App system, you pay Apple, if you don't, you don't. That's fair. The ban on links isn't about "fucking" with anyone, it's about maintaining the user experience of iOS. It's jarring to have an app kick you out to Safari. That's one of the points Apple made when they introduced iAds.

It's not as straightforward as that. Apple now won't allow app vendors to include a link to their website in their apps, which they have done in the past to avoid using the In App system. And by all reports (http://cnet.co/apple-app-no-buy-link-cnet), "Aside from not having any links to an e-bookstore, you can't even mention your Web site or explain to readers from within the app how to purchase books and get them onto the device."

Actually, if you want to use Apple's system, you pay Apple. If you don't want to use Apple's system, you can't sell digital items through your app. These vendors were only kicking you out to Safari because they had to in order to avoid Apple's 30% credit card processing fee (most processing fees are on the order of 1.5 - 2%). Before Apple launched their system, there were apps that accepted credit cards just fine. You can buy with a credit card in Amazon's integrated shopping app, just like any other Amazon service, because they sell physical goods. The experience is fine. But digital goods Apple takes a cut of (and doesn't even provide download hosting).

The worst abuse comes from iBooks specifically. Say that a publisher offers an ebook version of Harry Potter and the Deathly Hollows wholesale for 10 dollars. And don't think you can argue them down: all of the major ebook retailers have clauses in their contracts that specify that publishers can't sell to other people for less than they're selling to them. So that's 10$. Say that a company needs to make 1$ per transaction to survive as a business.

Apple is charged the usual credit card processing rate of 2%. Therefore, they sell their copies of Harry Potter at $11.25. You, on the other hand, have to pay Apple (your competitor) a credit card processing fee of 30%. Therefore, you have to sell your copy of Harry Potter at $14.30. Even if you squeezed your 10% margin down to nothing, you couldn't come close to competing with Apple's prices. And if you did, you'd just be sending money off to your competitor, who could plow that back into improving their ebook store.

The same is true of iTunes, and anything else that Apple decides they might like to sell on their phones. They already have the built-in advantages of being able to pre-load whatever they'd like onto your phone, and being able to tailor the OS to suit their apps. Any e-market that Apple enters on the iPhone is basically owned by Apple.

It's not Apple's phone. It's your customer's phones. They buy them, pay for them. Apple isn't pre-loading your app or anything like that, they're just making it available on the customer's request. And they ban your customers from getting your app any other way. They even have the legal power to arrest people for getting your app in other ways, though they have yet to do this.

Every store I visit offers their product at or very near the MSRP. In the instances where it's a different price it's because it's lower due to sale or clearance. I've yet to visit any store that sells goods for above the MSRP, and I'd imaging they wouldn't be in business very long.

MSRP is NOT the actual cost of the item, it's the cost of the item to the retailer plus a certain amount of profit. For quite a lot of stores out there the actual price is 50% that of the MSRP - that's 100% "profit".

Now what's the price of something sold through the Apple stores? The MSRP is the price listed for the item and the original cost is 70% of that. It's that simple, the Apple stores work just like every other store out there: items in them have a markup to cover distribution, hardware, software de

No, you have to charge 43% extra to break even when Apple takes a 30% cut. For instance, if a book is 1.00 normally, you need to charge 1.43 because 1.43 *.3 =.429. This means the margin is so high it's not even close to competitive with Apple's own products.

No, actually. By Apple decree, you must keep the same or lower prices on all in-app purchases that users could purchase on other platforms. Amazon could raise ALL of their prices by 30%, or they can attempt to eat the difference, or they can hide the in-app purchase option on some hideously obscure menu option. Or, as is the american way, they can sue.

I suspect the response will be a combination of things, but especially the suing.

It's a shame that their hardware is such a social status symbol for so many people.

That is a shame. It's also a shame that the device and OS are really quite nice. Or to direct our negative emotions more appropriately, it's a shame that Apple is so heavy-handed with their App Store policies and policy against letting the user install things from outside of said store.

The iPad is the most responsive tablet device I've used. Its browser is fantastic (though there are aspects of the Android browser that I prefer.) The email client is light-years ahead of Android's (though that's a relati

It's definitely better than any of the built-in clients I've seen. It's better than K-9 if for no other reason than the fact that it has threading.

I like K-9 Mail's handling of folders pretty well, but it's a heck of a lot of micromanagement. Once it's set up, it's pretty nice, but I've never had an Android upgrade go smoothly and have always had to wipe my device and restore. I've never successfully restored K-9's settings, so I eventually stopped configuring K-9 more than necessary to just get my mail.

Google and Amazon take about 30% of apps that are purchased directly on their stores. They don't get a 30% cut of in-app purchase transactions that don't involve them. They also both allow other stores / marketplaces onto their devices... The Amazon marketplace is available from WITHIN the Google marketplace, for example.

Now, a lot of what is in the Android Marketplace is ad-supported, with ads being Google's specialty. But that's an optional thing.

Amazon also gets at least 30% of everything you download for your Kindle, be it eBooks or Blog subscriptions they sell at whatever price they set. Before the broo-hah Apple their share was even larger. And if they didn't lock their devices down in a way that makes Apple look like Amnesty International, they'd surely ask 30% for everything you buy from any apps on them too. Funny how that is obviously unknown on Slashdot - how else could it be explained that nobody ever mentions it?

Actually, you can use other bookstores with the Kindle. It's fully endorsed by Amazon, and won't violate your TOS. No cracking / hacking / jailbreaking required. Just buy an ebook from wherever, and copy them over using USB. You can also use Amazon's own Whispernet, but there are potential data charges.

Assuming your prices are the same on every device. Or, you could raise prices appropriately for people on iOS devices and make the same amount for any purchase. Just the people using iOS devices would pay more for the same thing (which apparently is not a problem for them anyway, since they already bought the Apple hardware).

If I understand it correctly though, Apple doesn't just want 30% off of your purchases made through something you downloaded in the app store: If you create an account through your app downloading in the app store, Apple wants to claim 30% of what that customer pays for, ever. Charging someone 30% more than the rest because he happened to sign up to your service originally though an Appstore app doesn't seem to make much sense from a retailer POV.

...correct me if I'm wrong, but doesn't this mean that I can make 30% more per sale if I develop for some platform other than Apple?

Of course. You are free to crawl off to some untravelled corner of the internet to die any day you choose.

For Amazon or Netflix obviously they will easily acquire customers through other means. For smaller players 30% is nothing given the HUGE number of iOS users (hundreds of millions now) all with registered credit cards that can buy on a whim.

...correct me if I'm wrong, but doesn't this mean that I can make 30% more per sale if I develop for some platform other than Apple?

No, you can make probably around 20% more per sale if you handle credit card processing yourself, and you are selling online - you'd pay 5-15% for credit card processing probably. If you're selling product in a brick and mortar store you can expect the store to take more than 30%.

No idea why Apple think being user-hostile is a good idea - it's going to generate a lot of hostility towards them from their customers, and eventually they'll end up in Microsoft's situation, where everyone distrusts them no matt

Here's my take on it. Apple's greed is amazing to behold. And you have to love the conflict of interest between being owning the platform and also competing with Amazon via iBooks. How is it one company gets to take 30% of the sales of their competitor?
Apple, Greed and the Amazon Kindle App
http://jimlynch.com/2011/07/25/apple-greed-and-the-amazon-kindle-app/ [jimlynch.com]

It's not clear that it's about greed. Far more likely is that it's about control, control over the experience of their users. Apple has a direct motive to fully support the Kindle app on iOS, because the users of their devices want it there. iBooks just exists for users who can't be bothered to dive into the Kindle ecosystem. But also, Apple has a direct motive to prevent sketchy financial transactions from originating from within iOS apps. A couple of errant games that redirect users to a Russian mafi

How does this give in to Apple's demands? By eliminating the in app subscription/purchase capability, they've actually denied Apple any income from their sales. Seems like they refused Apple's demands, not gave into them.

Apple is pushing people in so many directions that someday soon they will find out the answer to this question. Do the apps being on iPhone give Apple power or does Apple owning the iPhone give them power over the apps? In the early days of the iPhone it struggled as simply an iPod with a ton of bugs and lacking features other smartphones had. The creativity of app developers started to create value on the iPhone. Apple's walled garden, on the other hand, has provided app developers a safe place where they

Before agency, Amazon raped publishers. Apple reversed the numbers when they announced iBooks. Seems everyone forgets this fact. If you are an independent author, you are very happy Apple changed the e-book world.

Apple didn't bring a new subscriber to the app. The user was already a subscriber that just so happened to have owned an iPhone. They then went and searched out the app, again, because they were already interested, and downloaded it to the phone. The phone is/was a medium. That's like saying Intel/Geil/Seagate/ATI/Asus/Gigabyte all get a cut of my Amazon order because they "brought" me to Amazon today. This would only hold true MAYBE if the app was already on the phone when you bought it, so you tried

I'd hate for GM to not only tell me who was allowed to ride in my car but also that any burger joint I drove my GM product to had to give Apple a 30% cut of any orders I or my passengers made at their drive-in window.

I just don't get it. Why is it that if Google doesn't want to comply, their only option is to pull the app. But if Google were to strip Apple from it's search engine results, that would be anti-competitive behavior?

True; they can't just strip Apple from their search engine completely. First, they have to give Apple a chance to sign on to a deal whereby Google gets a 30% cut of any business that they send Apple's way. Seems to be exactly what Apple is doing. If Apple doesn't agree to the 30% cut for the service of Google bringing a new shopper to their site - then they can remove them from the index.

Because Google holds a majority of the search engine market, making them the market leader, and by restricting (or removing search results from Apple, or any other company for that matter, they would definitely fall into the 'abuse' area of competition, as that could directly impact Apple sales). In contrast, Apple requiring apps to remove links to external app purchases outside of the app store is leveraged against all developers, not just some, and it could easily be considered a justifiable expense. Thes

I just don't get it. Why is it that if Google doesn't want to comply, their only option is to pull the app. But if Google were to strip Apple from it's search engine results, that would be anti-competitive behavior?

Google pulls sites from their search engine all the time. They do so when the rules are violated. Apple does the same thing with their App Store. Neither are anticompetitive behaviors.

Oh, silly me. I should have known better to even question Apple's practices. Excuse me while I go and gouge my eyes out now.

Apple makes about 30% profit on their devices. They make 30% profit on apps sold through the app store. Would it really f'in kill them if they let someone else make a buck? What, having the highest market cap of any technology company is not good enough for them?

You're right, IANAL, but I do have a brain and a sense of right and wrong and my "greedometer" gets pegged just about daily every time Apple makes a move.

I used to think IBM was a greedy corporation, then Microsoft came along and made them look like Ed McMurray. Now, Microsoft looks like like a gentle giant compared to the Apple. One big difference that worries me is that Microsoft seemed to care about the bad press they got and occasionally tried to smooth things over. Apple seem to just give the finger to anyone that complains about their business practices, and yet they manage to maintain a religious following, the likes of which I've never seen in 35 year in the business.

It's a part of the human condition. Do you not see how blindly the Fox News crowd follows 'their leaders' believing that everything their leaders do is just and right in every case?

I can easily see and identify this type of behavior even if I cannot fully understand or appreciate it. There are certain areas of my brain I cannot simply turn off. These people can and do live without those areas of their brains and they seem quite happy and confident as a result. When I was a kid, I used to cry wishing I c

Apple makes about 30% profit on their devices. They make 30% profit on apps sold through the app store.

And a brick-and-mortar store often makes anywhere from 50% to 200% profit on stuff sold through their store. Amazon makes money on stuff sold through its store. Google makes money on stuff sold through their outlets.

Every store has its rules and as long as the rules are spelled out and applied evenly then the only question becomes: "Do I want to buy or sell stuff through that store?"

If Apple asks for too much then rest assured they will have people dropping support for the store. If they are asking for the

There's one subtle but important difference between the App Store and any other kind of store: When you don't want to sell your stuff through a normal store, you can always look for an alternative, go to the competitor, set up your own store, or whatever.

If you're an informed consumer then you know that's the case when you buy an iDevice. You'll either have to use Apple's stores or jailbreak. If you're fine with that then an iDevice is just the thing for you.

If you're not an informed consumer then caveat emptor. You always have the option of returning the device and buying another brand that better fits how you want to use it.

Suppose that everything you put into your car, from brake fluid to fluffy dice to toys in the back for the kids, had to be bought at an official Ford dealer. Yes, there are other car brands available, but it's still unreasonably restrictive.

That's not a reasonable analogy, even if it is the obligatory car analogy. iDevices have a pretty good web browser that can provide a

Apple runs the app store (like the regular iTunes store) at near break even levels.

And you have the temerity to claim I'm ignorant? Even the citation you give shows that the app store made has contributed $189 Million since it opened. Granted, for a company with its revenues that may be small change, but only a lunatic can claim that a $189 Million profit is "just breaking even". Poor apple. Maybe, we should all chip in to support this charitable organization.

I wonder how many iPhones would have sold if there were no independent apps available for it? I'd credit the apps in the app store at least as much as Apples hardware for catapulting the company to the top of the food chain. True to Apple's image, they stick their finger in the eye of the indy developers that helped make them a success.

AFAIK, Microsoft hasn't changed anything. I still consider them as evil as ever. It's just that Apple has surpassed them on the list of companies I'd like to see burn in hell.

And you have the temerity to claim I'm ignorant? Even the citation you give shows that the app store made has contributed $189 Million since it opened. Granted, for a company with its revenues that may be small change, but only a lunatic can claim that a $189 Million profit is "just breaking even". Poor apple. Maybe, we should all chip in to support this charitable organization.

First of all the estimates are just that, estimates. Apple does not release the profit numbers from their store only the revenue. Munster has estimated they made $189 million; he also estimated only 1% for storage and delivery. He did even take into account other operating costs and did not take into account capital costs. If you read another report [cnet.com] which delved more deeply into the numbers, Munster concedes that he did not factor capital costs.

This does not factor in the roughly $81 million Apple has spent since launch to store and deliver the 4 billion free apps that have been downloaded.

I don't about you but my impression is that building the data centers is not cheap. Since that report, Apple has building data centers for their App Store as well as the iCloud offering for estimates of $1B a piece.

I have no idea how much Apple will pay for their data centers (though 1B apiece seems to be a bit much), but I do know one thing. Apple would not be building them it if it were not expected to be a profitable venture. All I can say is WAKE UP! Apple has passed Microsoft in terms of Market cap. Microsoft employs 93,000 employees, has a widely diverse product line as well as service organizations as well as a fairly profitable gaming division. They provide enterprise software that runs a sizable portion of th

I have no idea how much Apple will pay for their data centers (though 1B apiece seems to be a bit much), but I do know one thing. Apple would not be building them it if it were not expected to be a profitable venture.

Google spends about $500M on each of their data centers although their purpose is primarily crawling and their expenses are differently structured. So $1B doesn't seem that far off. Looking at their latest quarterly results [apple.com], Apple made at most $1.3B in iTunes and app store revenue. At most Apple took in $390M in revenue before accounting for costs including those $1B centers. At the same time, they made $20B in revenue for iPad/iPhone/iPods for a profit of $6B. I would say even if Apple made no money

I don't know how accounting works in your world but normally when pay for something as huge as a data center it goes to something called "capital costs". That capital cost has to be deducted from any and all revenue before you can show something called "profit". Some capital costs take a long time to pay back. There is the idea that some companies are willing to take a loss on some aspects of their business to make more money on other aspects. It's called "selling razor blades" [wikipedia.org]. Considering the huge am

I just don't get it. Why is it that if Google doesn't want to comply, their only option is to pull the app. But if Google were to strip Apple from it's search engine results, that would be anti-competitive behavior?

Well, Google controls a much larger portion of a large market. They are in a near-monopoly state. When they do things that are unfair, it is cause for anti-trust investigation. In contrast, Apple is intentionally* limited in their market share. And because of their limits in the market, the impact of their control of their segment of the market is significantly smaller.

The difference is essentially "harms the public" or "harms their portion of the market." In the second case, it is clear and obvious th

But Apple has a complete monopoly of the iOS device market. WTF does that have to do with anti-competitive behavior? Technically, Google has close to 0% of the mobile device market. HTC, Motorola, Samsung, etc all have chunks, but Google (with the exception of the Nexus) has very little. Being a monopoly is not a requirement to being charged with anti-competitive business practices last time I checked.

There is a fundamental confusion caused by the fact that Apple is providing the app store service for free to purchasers of the iPhone, who have paid a one-time fee (carrier subsidies are a different matter). Apple is asserting control over the service as if people were subscribing to it for a monthly fee.

Oh, wait, are their customers the consumers who purchase their products, or the developers who write software for their products? Or are they the media companies who sell music and movies on iTunes?

Apple wants all of them to be its customers--it wants to make money from all of them for everything that happens.

It's got to stop somewhere--and it ought to be at the first-sale doctrine. But the practical solution is to support Android instead. On the other hand, if Apple is allowed to get away with this forever, and they keep growing, it may become the accepted norm--or is it already?

By definition, they are allowed to control their own products. That is not called a monopoly. Otherwise the term "monopoly" becomes meaningless, since every company would be a monopoly.

Ummm, I recall Microsoft being called up on antitrust charges because they tried to give preferential treatment to IE on THEIR product and discouraged other browsers. I agreed with the charges at the time because I did think it to be unfair. I guess this doesn't apply to Apple because, well because they're Apple. Praise be to Jobs.

Right. Previously, Apple also outlawed that, where they said the price you offer through the app has to be the same price on your website. They took that part out, so now the theoretical "Apple tax" is actually a real thing. If purchasing something through an iOS app, people should expect to see an extra 30% charge, for Apple's share. It's the price people pay for the convenience of buying things through their iOS apps. Vendors can indicate that the price is lower on their site, but they're not allowed

Actually, since Apple takes 30% of what you charge, they'd have to raise their prices on iOS by 42.857% to make the same money that they did before Apple began this campaign of general asshattery. Companies that are on both iOS and Android need to raise their prices and then undertake a cooperative ad campaign about how you have to pay 43% more if you use iOS because Steve Jobs is a greedy bastard.

Though, it is amusing to see how as Android market share keeps growing and iOS has stagnated Apple changes to

doesn't apple have to give the app the 'apple blessing' with a signed signature before you can put it on an iThingWhateverItIs? If that's the case what about the one that i own? can I not test it on my on tablet without interference? Assuming that mine is NOT jailbroken that is. It seems silly that I should be able to sell my app or give it away to whomever i want who has bought the device and totally circumvent apple through blessing the app and/or through the app store.

I would really like to see a major player start promoting jailbreaking in a responsible way. It's completely legal, and they can distribute unsigned applications that do whatever they want without giving anything to apple except the money the consumer gave them when buying the hardware.

I'm so locked in with the apps and games I already have for my iPhone that I'm not going to go to Android any time soon, but I hate the closed platform monopoly. I can take care of loading it on my iPhone, just let me buy

Seems they just have to mark up a little for in app purchases. The free market will do the rest. My landline bill shows the something like 30% cut the government gets. Well, your amazon receipt should show that too imo.

And what do you do when you go into a bookstore? Do you not buy books unless the store doesn't add any mark up? How much did you pay for your computer parts at Fry's? I bet you paid more than Fry's paid the manufacturers.

Or what about the Android Market? Do you think Google runs it for free? Or Amazon itself?

And all this whining about Apple, Amazon's pricing policies for books and music have always been as bad, or worse, than Apple's.